Nevada businesses have remedies in breach of contract disputes
All business owners at one time or another will likely have to enter into a contract with an individual or another business. However, when a business is first starting up, the business owner might not fully appreciate the intricate workings of a contract or contract creation in general. Having a solid understanding of how contracts work and what makes them enforceable is key to avoiding potential problems later on in the contractual relationship.
There is generally only one of two kinds of laws that will govern a contract: the Uniform Commercial Code or state common law. In general, if a business owner enters into a contract for the sale of goods, the law governing that contract will be the UCC since those laws were drafted for the purposes of governing commercial transactions. In the alternative, if the business enters into a contract with a potential employee, or if it enters into a lease agreement with another business, those contracts will be governed by state common law.
What happens if a party fails to do as promised under the contract?
Unfortunately, many business owners in Nevada and elsewhere will experience occasional disagreements over contract terms or contract performance after the formal document has already been signed. One party may fail to complete its obligation as promised, or an argument over certain terms may arise. When that occurs, a breach of contract may have taken place.
Whenever such disputes arise, the quickest and easiest way to deal with the dispute is for the parties to attempt to resolve it between them. However, if that proves to be unsuccessful, there are other methods of resolution that can be explored, such as:
- Filing a lawsuit and using the court system to resolve the issue
- Pursuing mediation to help resolve the problem
- Using arbitration, which is less formal than litigation, but is binding on the parties
Legal remedies for breach of contract
In breach of contract actions, there are a number of remedies that may be available to the non-breaching party. One of the most common remedies in a breach of contract action involves compensatory damages. What that means is that the court will make the breaching party pay the non-breaching party an amount of money that will cover the non-breacher’s cost of having to go elsewhere to get what was originally promised in the contract. Another remedy that courts use is awarding punitive damages, although this is more rarely done. It is intended to deter the breaching party from doing so again by ordering the breaching party to pay a certain amount as punishment.
Business owners might also be entitled to what is known as equitable remedies. The court can either decide to cancel the contract and make the contract non-binding to either party, or the court could require specific performance, whereby it orders the breaching party to perform the services or deliver the goods as promised in the initial contract.
Business owners often have questions and concerns about contracts and what happens when one party does not follow through on its promises in the contract. That is why seeking the services of a legal professional who specializes in business disputes is recommended for resolving contract disputes as well as when entering into new contracts.